Bookmark and Share Email this page Email Print this page Print Pin It
Feed Feed

Oct 12, 201712:25 PMFinancial Perspectives

with Michael Dubis, CFP

Known vs. unknown and deep vs. shallow risks

(page 2 of 2)

Hurricane Harvey

This is a risk that already occurred and is now mostly priced into the markets. Much of the damages will not be covered by insurance. This is a tragedy of life and environment, while it is also a serious loss of wealth. A deep, unrecoverable risk has been experienced for many.

The unknowns, though, remain. They include the fact that so many people did not have adequate insurance, and the flood program combined with government funding will likely not be sufficient to return to par for many folks in Houston. This is a true destruction of wealth that cannot be replaced. Charity is one of the few sources of recovery for those impacted.

Hurricane Irma

This is also already a tragedy of life, environment, and property with more to come. This is a known risk combined with unknown. This is a deep and shallow risk, as well.

The pricing of risk is tied to insurance primarily. Insurance will most certainly take a deep hit, though markets can price this exposure. What they can’t price is the level of potential destruction beyond insurable property and to the loss of life, environment, and productivity. Again, charity is one form of help.

Destruction of this magnitude is a combination of shallow and deep risks, with the deep very difficult to recover from. The extent of the destruction is also an unknown, impossible to fully price. We learn of it after the impact and for years to come. Markets price in that “learning” as it happens. Both hurricanes will remind us a lot about shallow and deep risks, both known and unknown.

We can’t prevent a hurricane or war, but we can be prepared for it both in body, mind, and in our action plans.

We can also give to those who experience the deep risks. Most people simply cannot fully recover from a deep-risk event. I strongly encourage charity at a time like this.

MICHAEL DUBIS is a fee-only CERTIFIED FINANCIAL PLANNER™ and president of Michael A. Dubis Financial Planning, LLC. He previously served as lecturer at the University of Wisconsin Business School James A. Graaskamp Center for Real Estate. Mike can be reached at financialperspectives@gmail.com.

Disclaimers:
This article contains the opinions of the author. The opinion of the author is subject to change without notice. All materials presented are compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This article is distributed for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services described in this website or that of the author’s.

Mike Dubis does not guarantee the relevancy, appropriateness, or accuracy of any outside information or links. Mike Dubis does not render or offer to render personalized investment advice or financial planning advice through this medium. All references that might be made to an investment or portfolio's performance are based on historical data and one should not assume that this performance will continue in the future.

THIS COMMUNICIATION MAY NOT BE USED BY YOU AS A RELIANCE OPINION WITH RESPECT TO ANY FEDERAL TAX ISSUE DISCUSSED HEREIN AND IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY YOU FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON YOU BY THE INTERNAL REVENUE SERVICE.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Michael A. Dubis Financial Planning, LLC), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Michael A. Dubis Financial Planning, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Michael A. Dubis Financial Planning, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Michael A. Dubis Financial Planning, LLC’s current written disclosure statement discussing our advisory services and fees is available for review upon request. If you are a Michael A. Dubis Financial Planning, LLC client, please remember to contact Michael A. Dubis Financial Planning, LLC, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services.

Click here to sign up for the free IB ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.

Add your comment:
Bookmark and Share Email this page Email Print this page Print Pin It
Feed Feed
Edit Module

About This Blog

It is an understatement to say the world has experienced a radical shift in capital markets. There are more layers of information and opinions on the direction of the world than we've seen in decades. The internet and the media do not always make it easier, but Michael Dubis' contribution through IB blogs will help you sift through the noise and give you some perspective. You can find his company online.

Recent Posts

Archives

Feed

Atom Feed Subscribe to the Financial Perspectives Feed »

Edit Module